US Election – 2 share ideas that could benefit from a Harris win

D.R Horton

D.R. Horton is a giant in the US housing market.

Harris has been vocal about offering support to the housing market, in part by committing to building three million new homes, but also through other actions like incentives to new buyers.

As America’s largest new homebuilder by volume, Horton looks well placed to capitalise on any federal push to increase the housing supply.

Enviable margins stand out as a key attraction, among the highest in the industry in fact. That kind of efficiency is a benefit as it looks to capitalise on any increased demand for housing.

It also has a broad customer base. Its homes are aimed at different price points from first-time buyers, to growing families, and even luxury buyers. That allows Horton to adapt to shifts in demand across the market.

With Harris’ plans for more affordable housing, D.R. Horton’s exposure to first-time buyers puts it in a strong position to benefit from any government support, like first-time buyer assistance and tax incentives for sellers.

Being a homebuilder right now isn’t without challenges though – higher building costs are putting pressure on profitability, and affordability remains an issue due to higher mortgage rates.

The tight housing market has kept house prices supported, which has helped cushion the impact. Horton has also maintained a solid financial position, with positive free cash flows and relatively low debt levels, which helps to navigate these challenges.

Shareholder returns have been good so far, with over $500mn paid through share buybacks and dividends in the third quarter alone, and a recently announced $4bn share buyback program. This shows confidence in its financial health – but of course, no shareholders returns are ever guaranteed.

Horton’s scale, diversified customer base, and solid balance sheet make them well-suited to benefit from any government-led push to boost the housing supply.

The market's still very sticky, with rates coming down. But it’s by no means in a comfortable place yet. The housing market still faces uncertainties, so it might take some time for any benefits to feed through.

UnitedHealth Group

UnitedHealth Group (UHG) is a powerhouse in US healthcare.

A Kamala Harris win could prove a tailwind for UHG.

Harris is keen on making healthcare more accessible and affordable, particularly by strengthening support for low-income health programs and expanding Medicare (a health insurance program for older people). This aligns well with UHG’s business, which could benefit from more people being covered by government-backed healthcare initiatives.

UnitedHealth Group is a major player in US healthcare, providing health insurance through its UnitedHealthcare arm, which offers plans to individuals, employers, and seniors. It’s the scale of UHG that helps it keep costs down, while making sure its services remain accessible.

The company has successfully grown its customer base, especially by increasing memberships in private health plans for individuals and employer groups. The expansion of people covered by government health plans, like Medicaid and Medicare, has also supported its growth.

Optum, the health services division of UHG, goes beyond traditional insurance by delivering primary care services, managing pharmacy needs, and using data to improve healthcare delivery.

Optum Health focuses on providing coordinated care to patients, meaning different aspects of a patient’s healthcare are managed together, leading to better outcomes at lower costs.

However, there have been some challenges along the way.

Cuts to government funding for Medicare have added pressure, and the company was also impacted by a recent cyberattack.

UHG has remained steady throughout though, managing to stick to its profit targets despite these hurdles.

It’s making strides to innovate too.

UHG recently introduced a national ‘Gold Card’ system to cut down on bureaucratic hurdles for healthcare providers. Artificial intelligence is also being used across the business to help staff work more efficiently and improve patient care.

UHG’s size and broad range of health services help it stand out. Its good financial health and focus on making healthcare more effective put it in a good position to benefit from any future government support for expanding healthcare.

No matter who takes office, regulation is always hard to map, and rising medical costs could impact the insurance arm – both are key risks to watch.